Land Remediation Tax Relief

Tax relief on regeneration projects

Both due to planning restrictions and site availability, there are fewer green field sites available for development, so developers are increasingly having to consider the potentially more challenging brownfield sites; many of which might have contamination and/or dereliction issues.  Land Remediation Tax Relief (LRTR) was designed to help reduce the costs of undertaking these regeneration projects.  Unfortunately, despite being available since May 2001, there are still too many companies unaware it even exists, and sadly their accountants & lawyers too are rarely considering this valuable tax incentive or are aware of how to claim. E³ Consulting can assist both those incurring expenditure and their advisers alike.

LRTR is available to property traders and investors, on both commercial and residential developments. The relief is available at 50% or 150% of the qualifying land remediation expenditure, which can yield tax savings of between 9.5% and 28.5%, using the current 19% standard rate of corporation tax.

Qualifying Land Remediation Expenditure can be claimed for tackling pollution from previous industrial use, natural issues such as radon, arsenic or Japanese Knotweed, and/or remediating long term derelict land – such as old foundations, underground services, etc. – features that can be significant barriers to redevelopment and thus project viability.

Significant tax savings can be made

As you might expect – with up to 150% tax relief available – there are conditions that carefully control which companies are entitled to this valuable tax relief and specific criteria that must be met before a claim can be successfully made.

First introduced in May 2001, the LRTR rules were tightened considerably from April 2009 when the relief was extended to include the demolition of certain features on long-term derelict land. LRTR was mooted by Office of Tax Simplification to be scrapped in March 2011, but reprieved in Budget 2012, in recognition of the negative impact its withdrawal could have had on the housing industry and thus the Government housing ambitions.

However, LRTR remains a complex area of property tax, but well worth investigation by any companies undertaking regeneration projects involving remediation of contaminated land, or long term derelict site - being brought back into economic use - as the tax savings can be very significant.

E³ Consulting has undertaken LRTR claims for a wide variety of clients and situations.  In our experience project surveyors, environmental consultants and lawyers generally take too narrow a view – framed by their more legal or environmental risk perspective in assessing the contamination and resulting remediation.  These other consultants rarely have sufficient awareness or knowledge of the tax criteria.  Our project experience ranges from £35,000 up to £600m, and our clients are pleasantly surprised time and again at the levels of Qualifying Land Remediation Expenditure E³ Consulting ultimately agree with HM Revenue and Customs – achieving enhanced tax savings on their brownfield and regeneration projects.

Non-Resident Landlords

With the change of tax status for Non-Resident Landlords (NRLs) from April 2020 – now coming under UK Corporation Tax, rather than previously filing against UK Income Tax – NRLs will now also be entitled to benefit from LRTR on their qualifying remediation expenditure.

As with all legislative changes, non-specialist accountants and advisers can easily overlook these fiscal incentives, due to their lack of familiarity of the wider rules.

If in doubt, ask – we provide an initial free, no obligation HEALTHCHECK review of any given project situation – and would be delighted to hear from you.

Contact us

For more information call a member of our team on 0345 230 6450 or by completing the adjacent enquiry form for a no obligation, no fee initial discussion.

From our experience you’ll most likely be surprised at what we can achieve.